Gift Aid Rules 2016 outlined by Buxton accountants

Gift Aid Rules

Gift Aid rules governing donor benefits

Gift Aid rules which govern the benefits that charitable donors can receive when making a eligible donation have been consulted upon by The Treasury. Under current Gift Aid rules, donations up to £100, the benefit value can equate to a total of 25% of the donation; for donations between £100 and £1,000, the value of benefits is capped at £25, while for donations over £1,000, the benefit value can equate to a total of 5% of the donation, to the annual maximum value of £2,500.

The consultation, looked into whether calculating the ‘net’ value of donations on which gift aid can be claimed by deducting the cost of providing donor benefits from a charity’s gross donation receipts would achieve genuine simplification of the Gift aid rules? Other alternatives, such as removing the relevant value test and aggregate value test and operating the Gift Aid rules donor benefits through an extension of the split payment approach allowed under an extra statutory concession.

The ‘net’ approach, can often be seen as being complex to operate. It can also be inequitable to offset the full cost of all benefits, including those provided to donors of funds ineligible for Gift Aid. Removing the monetary thresholds altogether and replacing them with one of the alternatives outlined would mitigate the administrative burden on charities.

However there is little agreement on the question of reducing the number of monetary thresholds. There is significant support for moving to a percentage-based threshold system, with nearly three-quarters of respondents in favour, but these responses were often caveated (most usually in relation to the level at which the threshold should be set and the method used. A significant majority of respondents felt that a disregard for low value benefits (below £3) would be a simplification.

An anomaly in the current system of thresholds that allows twice the value of benefits for an increase in the donation made of just £1 (where the donation increases from £1,000 to £1,001).

Further consultation

The current maximum annual benefit value of £2,500 would continue to apply in all cases.

The current 25% limit on benefits for donations up to £100 would also remain unchanged.  For donations over £100, the upper limit for the £25 threshold would be reduced from £1,000 to £499 and the 5% threshold would apply to donations of £500 and over.

The government would be likely to set the single threshold at a rate in the region of 10% if accompanied by a disregard for low value benefits or in the region of 15% without a disregard. It also believes there could be significant merit in this approach.

Therefore, proposing an alternative which would involve calculating the donor benefits allowed for a single donation using two different percentage rates, i.e. applying one percentage rate to the first element of a donation and a different rate to any amount exceeding this. The total of these would be the permitted limit to the value of donor benefits.

Upon this basis, the government would be likely to set rates in the region of 25% of the first £100 of a donation, plus in the region of 2% to 4% of any additional amount donated if a disregard operated alongside, or 5% of any additional amount donated if not accompanied by a disregard.

For more advice and detail regarding gift aid rules in 2016, we welcome you to contact our Buxton accountants, Derbyshire

Budgets and Forecasts by Derbyshire Accountants

Budgets and Forecasts

The Importance of Budgets and Forecasts:

The managers of growing companies need clear, precise and well informed business advice and support that gives them confidence in the future and which allows them to concentrate on achieving their business objectives. Having accurate and timely budgets and forecasts underpins essential management.

In a world that is unstable and uncertain it’s imperative that you know what you are expecting to happen either financially or to validate your expectations in the event of something unexpected. Through detailed and thorough Budgets and forecasts, you’ll have validated essential management information.

How our Accountants in Derbyshire can help:

Our team of Derbyshire accountants work in collaboration with you, to model what the future could look like and the critical variables that can be taken to determine success or a potential change in direction. Our support can be as simple as a sense check of assumptions to the design and building of a multi-entity model; we tailor our approach to support your needs. Having an up to date picture of your likely finances and cash flow is crucial to enable you to make the right decisions at the right time.

We can help prepare budgets and forecasts, which enable you to forecast your profit levels and cash flow requirements and provide a benchmark against which you can measure your actual results. In addition to helping you to move forward, our business plans, budgets and financial forecasts can be used to provide reassurance to other third parties, such as banks etc.

Budgets are what you plan to spend or receive over a specified period of time; Forecasts are what you think you are going to spend or receive over a given period of time based on past experience. These are usually done at the beginning of the year and will set out what you are expecting (or hoping) the business to achieve throughout the year. Whilst it is always good to be inspirational with your business, it is also essential to be realistic – if you are performing variance analysis between your actual costs and income against unrealistic budgets and forecasts, it may become disheartening if you continually fail to meet your planned figures. It is important to remember that budgets are only a tool to help businesses achieve their business objectives, and not an end in themselves.

We can also offer the following services:

    • FD Services

Not all companies require the services of a full-time Financial Director, although many businesses may have an internal bookkeeper, accountant or financial controller. Experience has shown that such companies still require a financial sounding board, together with strategic and business advice usually provided by a Financial Director. We believe such companies will benefit from our FD on Demand service.

    • Interim / Emergency accounting support

Do you have a short term vacancy or need additional expertise on a particular project? Whether it is maternity cover or sick leave, our commercial accountants can assist at all levels to help you grow your business or ensure it is business as usual.

    • Business health check & review

Are you confident that your finance function is delivering what it should: rapid, relevant and accurate financial information? Using simple diagnostic tools and tried and tested methodologies we can assess whether it is delivering what it should to allow you to run your business. From a simple focus on one area of the process through to an entire finance function review our experts will help streamline, saving you both time and money.

Want to know more?

Contact our team of Derbyshire accountants via our contact us page.